International Marketing Orientations

Marketing and Business Solutions Company

 

International Marketing Orientations

 

Different attitudes towards company’s involvement with international marketing process are called international marketing orientations. Justin Paul and Ramneek Kapoor (2008) underline that “the management’s thinking, philosophy and guiding principles towards the internalization of the company’s operations will divide the level of involvement of the firm’s resources, including its marketing activities and talents”. In this statement Paul and Kapoor talk about the EPRG framework introduced by Wind, Douglas and Perlmutter, who stress that “the key assumption underlying the EPRG framework is that the degree of internalization to which management is committed affects the specific international strategies and decision rules of the firm”. The Perlmutter’s EPRG framework consists of 4 stages in the international operations’ evolution. The EPRG framework includes:

 

1. Ethnocentric approach;

 

2. Polycentric approach;

 

3. Regiocentric approach;

 

4. Geocentric approach;

 

Ethnocentric Approach

 

Ethnocentric approach underlines host countries superiority. In other words, it is associated with orientation directed first of all at the home country management, “the home country knows best culture is applied” (Bowie and Buttle, 2004). Overseas operations are considered only as an additional

extension of the local market. Paul pinpoints that in this approach “management philosophy, domestic technology, strategies and even personnel are far more superior to foreign operations and are a perfect fit for foreign operations as well”. Companies oriented on ethnocentric approach are distinct with their complex structure in home country, while structure in other countries stays very simple. Such companies do not adapt their products to the needs and wants of other countries where they have operations. Ranchhod and Marandi (2006) come up with a good summary of ethnocentric approach, saying that this international marketing orientation “tends to ignore much of the opportunities outside the domestic market while those that venture outside tend to operate on the basis of “standardized” or “extension approach” marketing and do not engage in adaptation of any noticeable degree”. On one hand this approach sometimes can work as advantage for the company when it views foreign markets as “a means of disposing of surplus domestic production” (Vasudeva, 2006). On the other hand, the company may experience a lot of difficulties to survive in foreign markets as its brands will not be accepted by consumers of that country due to cultural differences as they are completely ignored by the headquarters. In this case the company still will have two choices: to continue its operations only in its domestic market; or change its international marketing orientation to a more appropriate one according to nowadays requirements of the international brands’ consumers. The example of such change is NISSAN which in the first years of its existence on international arena was following ethnocentric approach by selling its cars abroad exactly as they were sold in their domestic market in Japan, after several years of its international trading the company realized that ethnocentric international marketing orientation is no longer relevant for some industries including automobile industry in which they were operating and changed its approach to polycentric (see 2:1:5:2). Vasudeva (2006) concludes that in today’s international business world ethnocentric approach appears to be one of the biggest threats for international organizations.

 

Polycentric Approach

 

A company following this orientation gives an equal importance to every country’s domestic market, as there is a belief in uniqueness of every market and its need to be addressed in an individual way. “The plans are devised to operate through individually established businesses, i.e. either by wholly owned subsidiaries or through marketing subsidiaries, separately in each country, allowing complete autonomy to units to operate as separate profit centres independent of head office” (Paul, 2008).When following this approach a company has to be a leader in technological leadership, produce high quality products or its production costs should be very low. It can also concentrate its attention on foreign markets which have similar consumer needs and conditions similar to domestic market. Among disadvantages of this orientation is low possibility of the economies of scale, high prices of products due to high investments in the research of foreign markets and adaptation of products to the needs and wants of particular countries. Examples of companies marketing their brands according to this approach are: Ford Motors, Suzuki, Toyota, General Motors, Nissan, etc. – all these companies adapt their brands to specific needs of each country’s consumer.

 

Regiocentric Approach

 

In this approach segmentation of the markets is fulfilled on the basis of similarities in terms of regions. A company finds economic, cultural or political similarities among regions in order to cover the similar needs of potential consumers. For example, countries of former USSR can form one group as needs and tastes of consumers of these countries are very similar as they were representatives of one nation not so long ago. The same products and strategies can be used in such set of countries like Denmark, Norway, Finland and Sweden or Pakistan, Bangladesh and India as they possess a strong regional identity and belong to the same cultural dimensions. Pepsi and Coca-Cola are examples of international companies which are successfully using this international marketing orientation.

 

Geocentric Approach

 

This orientation favours neither home country nor foreign countries where the company operates. It is also called a global approach the main idea of which is to target “global consumers” who have similar tastes. The main idea of this orientation is to borrow from every country what is best. The limitation is that it fully depends on constant global market research, which requires a lot of investment and time. This approach is for companies with an impressive capital that want “to become world leaders”... , in this quest “...manufacturers offer homogeneous, identifiable and often interchangeable services and products in order to integrate them for worldwide operational efficiency” (Paul, 2008). The European Silicon Structures is a pure example of geocentric international marketing orientation: the company is incorporated in Luxembourg, its headquarter was established in Munich, research facilities are in England, and France has its factory; the company went even further by assigning its eight directors from seven different countries.

 

Written by T.Panchuk

 

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